Measuring performance improvement of Taiwanese commercial banks under uncertainty

Chiang Kao and Shiang-Tai Liu

European Journal of Operational Research, 2014, vol. 235, issue 3, 755-764

Abstract: In order to enable domestic commercial banks to be more competitive globally, the Taiwanese government has twice attempted to financially restructure them, in 2001 and 2004. Different from other studies which use deterministic analyses to measure changes in performance between two periods, this paper adopts probabilistic analysis to take the uncertainty related to certain factors into account. Data from six years, from 2005 to 2010, are divided into two periods, 2005–2007 and 2008–2010, to calculate the global Malmquist productivity index (MPI) as a measure of the change in performance. By assuming beta distributions for the data, a Monte Carlo simulation is conducted to find the distribution of the MPI. The results show that, in general, the performance of the commercial banks has indeed improved. While conventional deterministic analyses may mislead top managers and make them overconfident about results that are actually uncertain, probabilistic analysis can produce more reliable information that can thus lead to better decisions.

Keywords: Data envelopment analysis; Malmquist productivity index; Probability; Uncertainty (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0377221713009053
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:235:y:2014:i:3:p:755-764

DOI: 10.1016/j.ejor.2013.11.006

Access Statistics for this article

European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati

More articles in European Journal of Operational Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().